LIP Invest, leading investment manager for Logistics Real Estate in Germany, is planning to launch its fourth logistics real estate fund for the 3rd quarter of 2021. The fund concept is planned as an open real estate special AIF with fixed investment conditions and, like its predecessors, intends to invest exclusively in high-quality logistics real estates in Germany.
The planned fund volume is 430 million euros, of which 240 million euros are equity. The fund documentation is not final yet. It is currently being negotiated with interested investors, who are planning to participate on a large scale with over 100 million euros. Like its three predecessors, the planned fund concept will focus exclusively on logistics real estates in Germany with a core strategy. As part of a broad diversification, the fund is to focus on established and futuristic locations for logistical uses with a permanent demand for spaces. In particular, properties with the potential for rent increases and added value are to be targeted.
In addition, a further risk reduction will be sought through different volumes of individual properties, property types, lease terms, several financing partners and investments in different logistics segments. LIP includes aspects of environmental compatibility, social responsibility and corporate governance both in existing funds and in the planned fund concept.
The third LIP logistics fund “LIP REAL ESTATE INVESTMENT FUND – LOGISTICS GERMANY III”, launched in October 2020, met with great approval from institutional investors. After numerous investors have increased their participation, the fund closes with an equity volume of 291 million euros.
“With a volume of 525 million euros, the fund is expected to be fully invested in the third quarter of 2021. We have already purchased 12 properties and are currently in the purchasing process for five properties. We are also in promising purchase negotiations for four other properties”, says Jan-Nicolai Tröndle, Head of Acquisition at LIP Invest.
LIP has already invested 1.2 billion euros in German logistics real estates with its three funds, including ongoing transactions. The portfolio now consists of 42 objects with a total rental area of around 870,000 square meters and a total rental income of 51 million euros per year. More than 50 institutional investors from the circles of insurance companies, pension funds, banks and saving banks as well as large foundations have subscribed to LIP fund shares for over 730 million euros since 2018.
“Investors value the close and personal relationship with us very much. With our large network, our closeness to the market – even in times of Corona –, our reliability and speed, we are always able to secure suitable properties for our funds despite the fierce competition and thus regularly meet the expectations of our investors for a quick capital call”, explains Sebastian Betz, Authorized Signatory and Head of Fund and Portfolio Management at LIP. “In the case of real estate and logistics, which require considerable specialist knowledge, more and more investors are now going to specialists, the so-called investment boutiques, instead of generalists like the large German and international fund houses”, concludes Betz.
“More and more investors appreciate the attractiveness of logistics properties with their combination of reliable rental income and potential for value growth. Logistics has proven to be the most stable asset not only during the Corona crisis. Empty shelves have made the importance and supply function of logistics clear to the citizens. The share of e-commerce will continue to rise in the future and with it the demand for suitable logistics space. In addition to retail, automobile manufacturers and the pharmaceutical industry also have high space requirements. As a result of the Corona crisis, the known global supply chains are being diversified and supplemented by additional suppliers from possibly different continents. Alongside this development, the switch to e-mobility and the previously announced increase in buffer warehouses will lead to a high demand for space in the next few years, if not decades. Moreover, the high investments made by the Chinese in infrastructure measures for the land route of the New Silk Road are leading to more transparency in the supply chain, shorter transport times and thus lower trading costs. According to our own analysis, this – together with the trading potential of the neighbouring countries on the New Silk Road – could lead to an increase in trading volume by a double-digit billion amount”, says Bodo Hollung, partner and managing director of LIP Invest.
“However, the resulting high demand for space is confronted with an ever-decreasing supply. State-imposed land use limits, the increasing reservations of the population towards logistics and municipalities, who prefer other types of use when designating land, are limiting factors for the urgently required new building space. As a result, however, this leads to stable rents, which also increase in many attractive locations”, continues Hollung, “which is why many investors want to invest in logistics and see logistics investments now as less risky than office properties.”